WASHINGTON — Innovation in banking received special attention in the Office of the Comptroller of the Currency’s latest semiannual risk perspective report, which also outlines emerging credit, market, cybersecurity and fraud risks across the industry.
The report, released by the OCC, said innovation can introduce new risks but warned that underinvestment in new technologies, products and services “may present material risks to long-term bank performance.” The national bank regulator said it aims to foster a regulatory environment that allows banks to advance their businesses and serve customers while operating in a safe and sound manner.
Banks of all sizes are exploring the use of artificial intelligence, the OCC said, with some institutions deploying advanced models to strengthen credit underwriting, detect fraud in real time and personalize customer experiences.
Additional Risk Areas
The report also highlighted several other risk areas, according to the OCC, including:
- Credit Risk. Banks reported tighter underwriting standards for commercial and industrial loans in recent regulatory surveys, citing a more uncertain economic outlook as the most common reason. Institutions also noted tighter standards and weaker demand for commercial real estate and residential mortgage loans during 2025. Weaker demand for business loans was attributed to reduced customer investment in plants and equipment and lower inventory financing needs.
- Market Risk. Banks with assets under $1 billion, in aggregate, recorded higher net interest margins during the first half of 2025, reflecting higher loan pricing compared with prior years. Banks with assets above $1 billion, however, reported a slight decline in net interest margins as falling loan yields offset lower deposit costs.
- Cybersecurity. The OCC said it has observed an increase in threats from foreign state-sponsored actors and sophisticated cybercriminal groups targeting the financial sector. The agency cited public advisories from the State Department, Treasury and FBI warning about risks posed by information technology workers linked to North Korea. A recent firewall access incident also underscored the importance of managing risks tied to aging infrastructure and end-of-life IT assets.
- Fraud Risk. Elevated levels and growing sophistication of fraud, including scams, continue to challenge banks, the report said. Fraud remains a key driver of operational losses, prompting the need for more adaptive risk management. The OCC and other banking agencies are reviewing comments on a June request for information seeking ways to reduce payments fraud, the OCC said.
